There’s a new book to add to your shelves this holiday season. Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement, by Wade Phau, is the latest text that aims to explain how the loan could play an integral role in retirement income planning.
Phau is a well-known retirement planning expert who has written extensively on the topic for outlets like Forbes and The Wall Street Journal. A principal and director of retirement research at McClean Asset Management and a professor of retirement income planning at The American College of Financial Services, Phau has been researching and writing about reverse mortgages for the past two years.
“It wasn’t high on my to-do list until late 2014, as I suppose that the conventional wisdom that reverse mortgages are not a good idea had influenced me,” Phau says. “But once I started looking at them carefully, I was fascinated by their potential role in an overall retirement income strategy… At first I just meant to create a chapter about reverse mortgages for a more general book on retirement income, but I ended up with enough material to justify calling it an entire book.”
Because he does not originate loans, like the authors of most other reverse mortgage texts do, Phau says his book presents readers with an unbiased resource of information about the loan.
“My background is with financial planning, and I’m an outsider for the reverse mortgage industry. I’m trying to demonstrate with quantitative analysis how reverse mortgages can positively impact retirement income plans,” he says. “I provide the language used in financial planning that can help reverse mortgage originators to be on the same wavelength as financial advisors and consumers who are attempting to build retirement income plans.”
Phau’s goal is to help people overcome misconceptions about the loan and learn more about its usefulness. “Conventional wisdom about reverse mortgages is still pretty negative. They have mostly been viewed as a last-resort option for when all else has failed,” he says. “But the growing popularity of variable-rate HECMs with their potential for line of credit growth calls for thinking about reverse mortgages in a new light.”
He says he believes more and more retirees will come to appreciate the benefits of the loan. “Social Security and home equity are the two biggest assets for the typical retiree. The financial planning profession has spent a great deal of effort over the past few years to educate the public about Social Security claiming strategies. Now it is time to turn greater attention to home equity.”
“Once people see the potential of reverse mortgages, a common question is: Why doesn’t everyone use them? It seems too good to be true. After reading the book, I hope readers can also understand the underlying mechanisms for why reverse mortgages work as they do.”